UK heading back to '1970s-sized state' whoever wins general election, report says

'Both main parties are gearing up to turn the spending taps back on,' says Resolution Foundation

Britain is heading back to a "1970s-sized state" in terms of public service spending, whoever wins next month's general election, a new report claims today.

As the political parties prepare to hit the campaign trail after the dissolution of parliament on Tuesday, the Resolution Foundation claimed both parties will "turn the spending taps back on".

The think-tank's new analysis suggests that even just maintaining public service spending as a share of the economy could mean overall expenditure rising to 41.3 per cent of GDP by 2023.

This, the researchers add, is largely down to chancellor Sajid Javid's plans for significant increases in infrastructure spending, and is well above the average of 37.4 per cent recorded average in the two decades before the financial crash.

The organisation added that with further spending increases on key pubic services such as the NHS, a future Conservative government is likely to be above 1970s levels in terms of public service spending.

It comes after the senior treasury minister, Rishi Sunak, rejected suggestions the Tories were "spending money like water" in their policy commitments on the BBC's Andrew Marr show.

John McDonnell, the shadow chancellor, also insisted on the same programme that Labour would produce a manifesto alongside a costings booklet, detailing where the funds for each pledge would come from.

The report, published ahead of the first December general election in almost a century, said Labour's plans could result in government spending as a share of GDP rising significantly above the 1970s average.

"Recommitting to the £48.6 billion of extra current spending announced in the 2017 manifesto, coupled with shadow chancellor John McDonnell's £250bn ten-year capital plan, would mean government spending as a share of GDP rising to 43.3 per cent," the researchers noted.

"After an unprecedented decade of austerity, both main parties are gearing up to turn the spending taps back on," said the foundation's chief executive Matt Whittaker.

He added: "The shared commitments to ending austerity, reversing elements of it, and big infrastructure plans mean that Britain could be heading back to a 1970s-sized state, whoever wins the next election.

"It's important that parties set out detailed economic strategy in their manifestos that reflects the changing size and shape of the state, and the big demographic pressures to come.

"Whichever party wins are going to face huge questions about how they are going to pay for Britain's growing state. The fact is that whatever promises are made over the course of this election campaign, taxes are going to have to rise over the coming decade."